Market Assessment of Chile

8. Transformers

Market Opportunity

Significant investment in new infrastructure in the electricity and mining sectors will spur new markets for transformers to Chile, particularly for power distribution. These industries are increasingly concerned with reducing electricity losses which will increase the market for energy-efficient transformers.

Market Conditions

The total market for transmission and distribution transformers in 1994 was around 800,000 KVA. Sales of transformers in Chile have grown over the past decade with the growth in industrial infrastructure. This growth in sales is predicted to continue over the next decade. The best opportunity for transformer manufacturers interested in the Chilean market is in the import of transformers. The best market for energy-efficient transformers is in new infrastructure projects, particularly new mining infrastructure. Copper mining companies are increasingly focused on reducing costs and recognize transformer efficiency as a means of reducing both electricity and production costs.

TABLE 10: IMPORTS OF TRANSFORMERS FROM THE US,
EXPORTS OF TRANSFORMERS FROM CHILE

Four Chilean manufacturers of transformers operate in the country: Rhona, Tusan, Ch Ltda and Schaffner. Two manufacturers, Rhona and Tusan, dominate the market for large transformers between 500 KVA and 30,000 KVA. The majority of Rhona's sales are transformers in the 1,000 KVA and 10,000 KVA range. Primary markets are industry, mining and electric utility companies. Large industry and mining projects that require large transformers procure them through international bids. Foreign manufacturers are competitive in Chile due to cost, quality and past experience with customers.

The market for smaller transformers totaled 150,000 to 200,000 KVA in 1994. CH Ltda and Schaffner produce transformers for this market only. Rhona is also a small player in this market. All four manufacturers import transformer components for assembly in Chile.

Rhona reports a doubling of sales in transmission and distribution transformers over the last 6 years, which they believe is consistent with their competitor's sales. The transformer industry expects the market to continue growing, particularly with the forecast investment of US$25 billion in industry, mining and energy infrastructure over the next 6 years.

Rhona and Tusan have each been in the market for about 30 years. Rhona had a 20-year licensing agreement with General Electric to manufacture GE-designed transformers. Tusan had a fifteen-year licensing agreement with Siemens for transformer design. Both agreements have expired in the last five years.

Chilean transformer manufacturers compete with foreign manufacturers on international bids for large projects. ABB, Siemens, and General Electric do not manufacture locally but compete on these bids with technology produced in their facilities in other South American countries like Peru and Brazil. US transformer manufacturers should ensure that they are aware of international bids solicited by Chilean industry for new infrastructure projects.

The price of transformers in Chile is made up of a base cost for the unit and additional costs for a variety of alternative enhancements. The transformer industry provides clients with a specification sheet that allows them to choose the levels of transformer efficiency. The enhancement costs (including energy efficiency) usually exceed the base cost of the transformer. Clients that specify particularly high levels of efficiency face a more dramatic increase over the base price. Unless the clients understand the life-cycle benefits of energy efficiency investments, they tend to be reluctant to pay the incremental cost.

Notes:

⁴⁸ This growth rate includes inflation and therefore overestimates the actual growth in sales.

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